Dreyfus Inflation Adjusted Securities Fund

Dreyfus inflation adjusted securities fund looks for returns that surpasses the inflation rate and to act on this target, Dreyfus inflation adjusted securities fund usually invests about 80% of it’s assets in inflation indexed securities.

Benefits of Dreyfus inflation adjusted securities fund

Dreyfus inflation adjusted securities are fixed income securities that are planned to defend investors from any loss of value because of inflation. The fund adjusts their principal and (or) coupon in accordance with the rate of inflation in a periodic manner.

Investment: Dreyfus inflation adjusted securities fund

The Dreyfus fund principally invests in US inflation indexed securities. On certain occasions, the fund invests in foreign inflation protected securities and other fixed income securities that are not adjusted for inflation. Some of the examples of such fixed income securities are U.S. government bonds, mortgage related securities, asset-supported securities and corporate bonds. Dreyfus fund sometimes invest in securities with terminal maturities of any length.

Strategy

In certain cases, Dreyfus fund use derivatives with an intention to increase returns, handle interest rate risk or to adopt a hedging strategy. On certain occasions, the fund engages in a series of sale contracts or purchasing activities. The fund sometimes is involved in activities like short-selling, specifically for hedging purposes. This is done to restrict exposure to a probable decline of market in the value of Dreyfus portfolio securities.

Risks

One of the major risks of Dreyfus funds is the fluctuation of investments in the fund. As a result, one can lose money. Some other major risks include inflation indexed bond risk, interest risk and liquidity risk.

• Inflation indexed bond risk: The interest payments on inflation indexed bonds are unknown in advance, as it may fluctuate in accordance with the rate of inflation. The principal and interest is adjusted in periodic manner based on the rate of inflation.
• Liquidity risk: In absence of any active market for some particular types of securities, it could have been difficult to sell the securities at their comprehended value. Therefore the value of such securities sometime falls in a dramatic manner.
• Interest rate risk. In the event the real interest rates rise, the prices of Dreyfus inflation adjusted bonds will fall and eventually the share price of the fund will also fall.

Some of the other risks involved in Dreyfus fund include credit risk, foreign investment risk, derivatives risk and short sale risk.